Undergoing quadruple bypass surgery would cause anyone to view life differently.
In Dimon R. McFerson’s case, the February 1999 operation certainly opened his eyes — to the world outside his corporate duties as chairman and CEO of Nationwide.
“I enjoyed the break,” he says of the six weeks he spent away from the office recuperating.
A leadership position, he points out, stays with you 24 hours a day.
“I would say the time I had in ’99 was the only time my wife and I had in eight years,” adds McFerson, who spent more than 20 years with the company, the last eight as CEO of the $115 billion-asset organization. “I can’t count more than four times when my wife and I took a week off.”
The experience helped him confirm his notion that he should begin thinking about retirement.
“I figured eight years is like two four-year terms,” he says. “I felt like I had done the major part of the job I wanted to get accomplished.”
In his tenure as CEO, McFerson repositioned Nationwide to enter the new millennium with three major businesses: personal lines of insurance, retirement savings and asset accumulation, and asset and money management.
Under his leadership, Nationwide grew to become the fifth largest auto and home insurer in the nation. Nationwide Life Insurance Co. is the country’s 12th largest life insurer in terms of assets.
Still, his decision to retire wasn’t easy.
“I’ll miss being a CEO,” says McFerson, who officially stepped down from his CEO position Sept. 15 and as chairman Dec. 31. “That’s where the action is, and there’s no one to backstop you — you’re the last person. There’s a lot of excitement. There’s a lot of variety. But at the same time, I’m looking forward to reclaiming my life.”
No wonder, considering he not only dedicated time to Nationwide, but also gave up private time to such community and industry affairs as United Way of Franklin County and of America; the American Red Cross; COSI; the Greater Columbus Chamber of Commerce; The Columbus Foundation; the Insurance Information Institute; Insurance Institute for Highway Safety; and the International Cooperative and Mutual Insurance Federation.
“I would admit that it’s probably hard for anybody having been a leader of an organization — particularly of a large organization — to walk away,” he says. “I think the longer you prepare for it, the easier it is.”
Breaking the news
McFerson’s loyalty to his company made him careful about leaving it.
“Because I love Nationwide and think so much of the company and the organization, I wanted to make sure they had time,” he says.
McFerson informed Nationwide’s board of his retirement decision in winter 1999, more than a year before he made the public announcement that he would be stepping down.
“I did not want a lame duck situation,” he says. “I’m proud of my board that they kept it very confidential.”
His 14 fellow board members, in turn, respected his decision and quietly set about the task of finding his replacement.
Meanwhile, it was business as usual at Nationwide.
“My role with the company didn’t change at all,” McFerson says. “Our board is unique. Because of the cultural tradition of Nationwide, they wanted to be in the leadership position of driving the process. Sometimes a board will totally acquiesce to the CEO for that decision, but because of the background of Nationwide and the way our board has operated over the decades, the board needed to play a major role in that CEO succession process.”
His role in the search, then, was to make sure the process was in place — and advise the board to be cautious.
“I encouraged them: ‘Don’t rush this,'” he says. “Let’s take our time and go about this carefully and thoughtfully.”
Nationwide’s outside board members formed a search committee, chaired by Arden L. Shisler, board chairman of Nationwide Mutual Insurance Co. and president of K&B Transport Inc. trucking company in Dalton, Ohio. That committee sought help from the Atlanta office of Heidrick & Struggles, an international executive search firm that has an insurance and financial services practice.
It was the first time the board used a search firm to help with the process, Shisler notes.
“There was a definite advantage to that,” Shisler says. “It really helped us bring outside expertise to that process, from people that do that every day. They offer insight and help that we don’t have within our organization.”
In addition, he says, “An outside firm helps take some of the politics — and that’s only natural — out of the process.”
“Nationwide’s a national organization, and the board wanted to make sure they had the opportunity to interview inside candidates and outside candidates and do the appropriate benchmarking,” McFerson says of using Heidrick & Struggles in the process.
The outside firm interviewed each board member one-on-one, then gave the board a synopsis of what it, as a unit, wanted to see in McFerson’s successor.
Among the qualifications sought: “Fiduciary responsibility, gets along with the board, understands where the future is in financial services, is energetic — all those things that are important to a board,” Shisler says.
Although he acted as an adviser for the board during the search, McFerson had no say in the final decision of who was named as his successor.
“The board wanted to control this process. I had the opportunity along the way to talk about the inside candidates — who they knew very well. That was all weighed and considered with the work of Heidrick & Struggles and the board,” McFerson says.
McFerson made his retirement announcement public in mid-May 2000; by the end of the month, his successor, W.G. “Jerry” Jurgensen, was introduced.
Making the transition
McFerson put a lot of thought into how to hand over the reins to Jurgensen. He wanted a seamless and smooth transition.
“Jerry and I, we spent a lot of time together in the first few weeks just talking about people and customers and businesses and regulatory issues and the community,” he says. “I’d do it in one-hour sessions because, in my view, if you do it in two to three (full) days, you get overloaded.”
His systematic approach also let Jurgensen have some independence.
“At the end of the day, he had to get out and meet people and see for himself,” McFerson says, noting that Jurgensen would then come back to him for more input.
“He was very respectful of me as CEO, and I was respectful of him knowing he was coming in from outside and needed some input on what was happening,” McFerson says.
Shisler attributes what he calls an “extremely smooth” transition to the relationship between the two.
“Both Mr. McFerson’s and Mr. Jurgensen’s ability to sit down and work with each other through the transition made it absolutely wonderful — much better than I expected,” he says, noting that he would expect conflicts in any transition.
Cooperation of company staff presidents and senior vice presidents during the transition also helped, he says.
“It was a total combined effort, I would say, in Nationwide to make it work, and it worked very well,” Shisler says.
Jurgensen, who answered questions about the transition through a written statement to SBN, also attributes the smooth process to the cooperation of everyone at Nationwide.
“The biggest challenge for me was that I was the first Nationwide CEO to be named from outside the organization,” he says. “It means that not only do I have to learn the organization, but the organization has to learn about me as well. As a result, I have been spending a lot of time reaching out and speaking with various groups of Nationwide employees and managers.
“Joining Nationwide has provided me with the opportunity to learn a new industry. While I come from a financial services background, the property and casualty business is a new area for me.”
Jurgensen is no stranger to CEO transitions, having gone through four during his 10-year tenure with First Chicago Bank.
“Through those experiences, I learned that in order for transitions to be successful, people’s heads and hearts must be in the right place,” he says. “I want to thank Dimon McFerson and the management team for making this transition so smooth. Dimon has been gracious, patient and understanding.”
Addressing employee, customer fears
During the transition phase, McFerson had the task of reassuring employees and customers of the leadership change.
“I think the most important things are your customer relationships,” he says. “At the end of the day, you have to make customers realize this is an orderly transition — McFerson will still be around to make sure that will be the case.”
He and Jurgensen needed to get in front of customers, suppliers and distribution channels to let them know the company would continue to serve them.
“When an organization our size goes outside for a new CEO, it could be inferred that’s going to be a change in direction — which it’s not,” McFerson says. “Clearly Nationwide was and is a strong company, and it’s serving its customers and community very well, and it will continue to do that.”
Inside Nationwide, McFerson says, employees knew he was approaching age 65 — the mandatory retirement age at the company.
“That creates a certain anxiety,” he says. “A change in leadership brings a change in business practices, there’s no question about that.”
Already Jurgensen has made some changes: tapping Washington, D.C., attorney Michael S. Helfer, one of the key figures in crafting the Financial Services Modernization Act, to oversee the newly created Office of Strategic Planning; promoting Donna A. James to executive vice president and chief administrative officer; and elevating Richard D. Headley to president and managing director of Nationwide Global Holdings.
Jurgensen says he’s excited about the prospects for Nationwide.
“This is a very good company,” he says. “Our ambition is to make it one of America’s great companies.”
He knows he’ll face a state of flux in financial services thanks to regulatory reform.
“As the financial services industry evolves, Nationwide will need to evolve as well,” he says. “It is my job as CEO to help the company traverse these new roads (and) look for and act upon new opportunities in this new era of financial services modernization.”
Breaking the ties
McFerson and Jurgensen agreed the transition should last about 60 days — then McFerson would physically move out of the Downtown offices, even though his stint as company chairman didn’t end until December.
“The organization needed to know I was retiring,” McFerson says. “There’s never a right time for anything — you just have to say, ‘This is the time.'”
Shisler agrees, noting the board learned a lesson when McFerson took over the top seat at Nationwide from John E. Fisher in 1992.
“We allowed the transition to be way too long for the first time,” says Shisler, who chaired the nominating committee that chose McFerson as Fisher’s successor. “Allowing Mr. McFerson and Mr. Fisher to be together for almost a year — that was way too long. The new person, whoever he or she might be, has ideas and has the excitement of the new job. They want to make their mark, implement the programs they see are important.”
McFerson says his move into Nationwide’s top spot was different because Fisher had been CEO for 11 years, but almost all the board members were new at that time, so Fisher felt he needed a longer transition out of the company. McFerson, however, decided that when the time arrived for his own departure, two or three months would be enough.
“The lesson people have to recognize when you’re changing leaders is: recognize it may be hard, it may be difficult, but when the change is made, you have to make it as easy as possible on the new person,” McFerson says. “Step aside, give up the corner office and remove yourself from the highly visible position — but not immediately. The new person needs you there to talk to. I don’t care whether it’s an inside person or an outside person, you know a lot. They need to be able to pick your brain.”
At some point, however, the successor needs to go it alone.
“It’s just when the job is yours, the organization knows it’s yours, and even though you don’t know anywhere near as much as you need to know, you just kind of have to go on with it,” McFerson says. “You watch a CEO for a long time, and I had the opportunity of doing that with John Fisher and I thought I knew what it was all about. But I’m here to tell you the majority of the job you don’t see.
“What you think is going to happen, that does happen, but there’s so much more of the job. … You just have to learn that on your own.”
Life on the outside
McFerson says he and his wife, Darlene, have decided to call Central Ohio their permanent home, especially considering their seven children and 21 grandchildren all live here.
“I will continue to be active in community affairs and church activities — but I won’t be working morning, noon and night,” he says.
He’ll spend about six more months as chair of United Way of America and then retain a seat as past chair. He was just appointed to a nine-year term on The Ohio State University Board of Trustees, and his seat on the board of governors of the Columbus Foundation expires in 2003. He’s also still chair at COSI for at least another two years.
Meanwhile, Nationwide leadership has made sure Jurgensen is making the rounds in Columbus, meeting one-on-one with community leaders.
“My first summer in Columbus has shown me a great deal about Nationwide’s commitment to this city,” Jurgensen says. “It is clear to me what Nationwide means to Columbus and what Columbus means to Nationwide. It is great to work for a company that has the capacity and the willingness to make such a difference.”
Time for himself
McFerson does plan to leave open some of his time for personal goals.
“I want to improve my computer skills. I want to do some family genealogy. I want to organize my life better — do some estate planning. I’ve done some, but I want to do more,” he says. “I have a lot more ideas and things I want to do than I have time to do.”
He has no plans to consult for a fee.
“I may help somebody or an organization once in a while. If I do, it will be pro bono and of very limited duration,” he says. “This is my time now.”
Meanwhile, he’s still just a phone call away for Jurgensen.
His advice to his successor: “Listen very carefully to as many people as necessary who have some knowledge on issues where important decisions are going to have to be made,” he says. “It’s been my experience that when you are the CEO, you are the final decision-maker and you can’t possibly know it all.”
McFerson remembers a particular piece of advice he received from his own predecessor at Nationwide, John Fisher.
“He said to me many times, ‘Measure twice and saw once. You might make a mistake measuring once, so before you saw, measure again to make sure you’ve got it right. Then saw.’ That was sound advice,” McFerson says.
He says it amazes him how one person at the top of a corporate pyramid makes a difference in the organization.
“When you’re that one person, you have a lot of responsibility to people — to thousands and thousands of people. That’s what kept me awake at night — making sure I was doing the right thing for them and doing the right thing for the company,” he says. “When you think about that one person and the responsibility they hold, it’s pretty awesome.” Joan Slattery Wall ([email protected]) is associate editor of SBN Columbus.